Major pension reform fails in nationwide ballot

Supporters and opponents of the pension reform agree on the need for amendments but necessarily on how to secure the funding of Switzerland's main social security system Keystone

Voters have thrown out a wide-ranging overhaul of Switzerland’s old-age pension scheme. It is the third unsuccessful reform attempt in almost 20 years.

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About 53% of voters came out against the project, which was launched by government but amended by parliament following several years of debate.

The planned increase in value-added tax (VAT) to help finance the reform also failed to win the necessary majority, according to final results.  

“There has been rejection across the country, notably in rural areas as well as in parts of French-speaking western Switzerland,” Lukas Golder, co-director of leading GfS Bern research and polling institute, said on SRF public radio.

It was arguably one of the most important domestic issues to be decided by voters during the current four-year parliamentary term. Parliament narrowly approved the reform last March following six years of debate. 

The reform package aimed to raise the retirement age for women from 64 to 65 in line with men, a reduction in the so-called minimum conversion rate for assets accumulated in compulsory occupational pension plans to 6%, and a slight increase in VAT. To compensate, all new pensioners would have received an additional CHF70 ($72) a month.

Debate to continue

Interior Minister Alain Berset, who is in charge of social security and pension issues, said the government had taken note of the result but discussions would have to continue on the issue.

“The funding and stabilisation of the pension system remains a major challenge for our society,” he told a news conference.

He said the result of Sunday’s vote would be analysed closely and he would invite all sides for talks on the next steps. It is not the moment to rush to conclusions as interpretations of the results differ considerably, according to Berset.

“In a direct democracy you always have to be prepared to accept defeat,” he Berset said, pledging to continue to engage with passion in forthcoming debates.

Complex

The political right said the outcome of the vote showed that the reform was too complex and put a heavy financial burden on the younger generation.

The far-left, which also campaigned against the reform, said it was pleased that women’s retirement age will not be increased.

Supporters of the reform have admitted defeat but they warned that an alternative solution to shore up the pension system will be difficult.

It could take several years for a new proposal to be ready. The centre-right wants to stagger a reform package, while the left has pledged to oppose any attempt to raise the retirement age.

Compromise

“The proposed reform was no doubt problematic,” says Patrick Emmenegger, political scientist at St Gallen University. “But it is hard to imagine that an acceptable proposal can be presented at short notice. The statements from both sides don’t bode too well.”

Emmenegger says Sunday’s winners will have to offer a compromise to the political left if they want to have realistic chance. The left for its part could face a dilemma.

“It will be interesting to see whether the political left in French-speaking Switzerland and the Young Socialists will put the concerns of women above those of the younger generation,” he says. 

Sunday’s vote was the third unsuccessful attempt at the polls or in parliament over the past two decades to amend legislation to remove a structural deficit of the pension scheme. 

Turnout in the latest ballot was 46.8%, an average value but below expectations given the issue at stake and the lively campaign over the past three months.

Campaign

The government and a slim parliamentary majority, backed by parties left of the centre, have argued that the reform is a reasonable and fair compromise, which is needed to shore up the finances of the main social security insurance scheme in an ageing society.

However, opponents said the reform package was too complex and included wanted an unnecessary increase in benefits across the board.

Old age pensioners living outside Switzerland were at the centre of the debate, following a comment by a leading politician from the centre-right.

Her controversial proposal to cut the pensions of people who do not pay taxes or spend money as consumers in Switzerland caused an uproar among the Swiss Abroad community.

Results vote September 24:

Pension reform:   47.3% yes      52.7% no

VAT increase:       50% yes         50 % no; but short of a majority of the 26 cantons

Food security:      78.7% yes      21.3% no

Turnout: 46.8%

About 77,000 Swiss expatriates were eligible to take part in the ballot using e-voting, according to the Federal Chancellery.